Global food prices were 1% lower last month than in May, a second monthly fall led by declines in dairy and sugar costs, easing in cereals and edible oils prices and the prospect of rising global output, according to United Nations (UN) agency the Food and Agriculture Organisation (FAO).
The Rome-based agency said that its index tracking 55 food items fell by 0.9% to 211.3 points in June, from a revised 213.2 points a month earlier and to its lowest in four months. The index, which stood at a record 237.9 points in February 2011 when high food prices contributed to the Arab spring uprisings in the Middle East and North Africa, is still 5.4% higher than a year ago.
“Last month’s decline reflects a drop in sugar and especially dairy prices, with more contained slides affecting cereals and oils,” the FAO reported. In dairy, “calm is returning to the market, after an abrupt fall in New Zealand’s end-of-season output, as dairy supplies are being sourced elsewhere, including Europe and the US.”
The dairy price index fell by 4.3% in June, having risen in April 2013 to the highest since December 2007 as drought cut supplies in New Zealand. The sugar index was 3% lower and a gauge of grain prices was 1% lower last month, the FAO said.
Food prices were also sharply higher in summer 2012 due to a historic drought in the US but prospects for a rebound in global grain supply and good weather forecasts are now easing pressure in the markets.
“Crop prospects are even better than what we anticipated last month, while demand is subdued,” said FAO senior economist Abdolreza Abbassian. “We should be in for a season with lower prices and as inventories are being rebuilt, especially for corn, prices should be more stable.”
FAO and the Agriculture Market Information System (Amis) raised their estimate for 2013-14 world wheat output by 2m tonnes to 704m tonnes, pointing to improving prospects in most major producing countries with the exception of the US.
The organisations also raised their estimates for maize output in 2013-14 to 972m tonnes from a previous forecast of 963m tonnes in June.
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